The road to financial ruin is
paved with plastic.
More than ever before Americans are racing along this
highway to hell -- saving less than ever, draining cash from home
equity and continuing their unrelenting pursuit of the good life.
They're
carrying a mountain of consumer debt, comprising bank and department store credit
cards and those "easy-to-get, everybody-rides" auto loans. Americans
can't seem to get enough of them. It's an addiction and, like
all addictions, those who are hooked are in denial -- debt denial.
As a result, we're in it up our eyeballs; more than
$2.15 trillion as of August 2005, according to the Federal Reserve.
All those zeroes translate to nearly $7,700 for every man, woman
and child in the United States.
What's more, it's been increasing steadily by billions
every year: $1.7 trillion in 2000, $1.84 trillion in 2001, $1.92
trillion in 2002, $2.01 trillion in 2003 and $2.1 trillion in 2004.
Could
it be that as a nation we have a lot to learn about personal finance? In
2004, Bankrate's
Financial Literacy Survey showed America earned a grade of "D" in
financial literacy. The statistically valid survey of 1,000
Americans conducted for Bankrate by RoperASW, revealed that a wide gap between
what we know we need to do for our financial well-being and what we actually do. For
example, 71 percent said that keeping an emergency fund is "very important,"
but just 44 percent said they have one. That's a gap of 27 points. And
most said they are worried about the amount of credit card debt in this country
but insist that, personally, they don't have a problem. Only a minority of Americans
confess to having a problem managing their credit. For example: - 75
percent say they don't make major purchases on their credit card unless they can
pay it off immediately.
- 69 percent said they don't
put any charges on their credit card that they would not pay off right away.
Which raises this question: Where is all that credit
card debt coming from?
Do you have a problem? Are you making good spending
choices or are you in denial? To find out if you are in control
of your spending, consider these questions:
- Do
you know how much you owe?
- If you had to estimate
the balance on each of your credit cards right now, could you come close?
- Do
you know how much you're paying in interest on your credit cards? Or are you shocked
every time the mailman brings you a credit card bill?
If you're not sure where you stand, you can get a
quick reality check using Bankrate's credit card calculators. One
shows the true
cost of paying the minimum, and another computes what
it will take to pay off your credit card.
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